IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts

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1 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts

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3 Advisory Objection Procedures in the Netherlands: A Case Study on their Usefulness in Dutch Competition Law Jan Jans and Annalies Outhuijse * 1. Introduction Article 7:1 of the Netherlands General Administrative Law Act (GALA) states one of the principles of judicial protection in Dutch administrative law: before you can appeal against a decision of an administrative authority to an administrative court, you must first lodge an objection with the administrative authority that adopted the decision. 1 Consequently, there is no access to the courts until the administrative authority has reviewed its decision, and this also applies to fines imposed by the Netherlands Competition Authority (NMa). The value of this procedure has regularly been questioned in the past; one of its most notorious critics is a leading Dutch competition lawyer, Mark Biesheuvel, who expressed his dissatisfaction with the objection procedure in the Dutch legal journal Nederlands Juristenblad more than 15 years ago. To quote: Generally, the procedure involves a time-consuming and wholly unnecessary ritual filing past public servants who have dug themselves into entrenched positions ( ) ( ) in practice, the procedure regularly amounts to a legal restraining order which wrongly denies individuals access to the courts for long periods of time, sometimes years. 2 On 1 January 2013, the Netherlands Competition Authority is merging with the Independent Post and Telecommunications Authority of the Netherlands (OPTA) and the Netherlands Consumer Authority (CA). The new organisation is to be known as the Consumer and Market Authority (ACM). To enable the ACM to operate effectively and efficiently, a bill is currently being prepared which will * Prof. dr. J.H. Jans is Professor of Administrative Law at the University of Groningen, the Netherlands, and Vice Chair of the Advisory Commission on Competition Act Objections (Adviescommissie bezwaarschriften Mededingingswet), but this article is written in a purely personal capacity. A. Outhuijse is a student at the Law Department of the University of Groningen. The article has been written within the context of the faculty research programme Public Trust & Public Law. 1 Art. 7:1.1 GALA: A person who has the right to appeal a decision to an administrative court, must first lodge an objection, unless: [there follows a list of decisions in relation to which this does not apply]. 2 M. Biesheuvel, Weg met bezwaarschriftenprocedure, Nederlands Juristenblad, 1996, p

4 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts streamline the procedures and enforcement instruments available to the ACM. 3 One of the proposed changes concerns abolishing the objection phase for decisions imposing fines. The aim of the present article is to discuss the reasons for this proposed change. We will be concentrating on sanctions under the Netherlands Competition Act (Mw) and the role played by the Advisory Commission on Competition Act Objections (Adviescommissie bezwaarschriften Mededingingswet (AbM)). As not all readers will be equally familiar with the objection procedure in Dutch law we shall first discuss it briefly. 2. The Objection Procedure in the GALA General As noted above, under the GALA, an interested party can only contest an administrative decision before a court if he has previously lodged an objection with the administrative authority that took the decision in the first place. This means the administrative authority is required carry out a full review of the decision being contested. By contrast with a judicial appeal, the administrative authority must consider not only the lawfulness of the contested decision, but also policy aspects. Moreover, the review must be carried out with regard to the situation, both in fact and in law, applying at the time of the review, in other words ex nunc: in principle this means taking changed policies, changed legal rules, and also changed circumstances into consideration. The objection procedure is thus both about legal protection and extended administrative decision-making. Under Article 7:2 GALA, before giving a decision on the objection, the administrative authority must give interested parties the opportunity to be heard. For this, it has two options. First, under Article 7:5 GALA, it may conduct a hearing itself, as the OPTA does. Alternatively it can appoint an external advisory committee under Article 7:13 GALA, as the competition and consumer authorities (NMa and CA) do. Under article 7:13 GALA, an advisory committee must consist of a chair and at least two members, and the chair must not be a member of the administrative authority or work under its responsibility. The chair should not have had any previous involvement in the matter. Although not a requirement, in most cases all members of an advisory committee are independent, as is the case for the competition authority. It is entirely up to the administrative authority whether or not to appoint an advisory committee. 3 Wetsvoorstel stroomlijning markttoezicht ACM, at < 4 See generally: H.B. Winter, De Awb-bezwaarschriftprocedure: een praktische handleiding, Kluwer, Deventer, 2003; L.M. Koenraad, K.H. Sanders, Besluiten op bezwaar, Kluwer, Deventer, 2006; Handreiking bezwaarschriftprocedure Algemene wet bestuursrecht, Ministerie van Justitie, The Hague,

5 Advisory Objection Procedures in the Netherlands It is clear from the legislative history of the GALA that the original purpose of the objection procedure offering an easily accessible, informal procedure was to avoid large numbers of appeals to the administrative courts. 5 During the objection procedure, the administrative authority would have the opportunity to repair obvious and simple errors by either taking a new decision or giving better reasons for the original decision, so that disputes between individuals and the administration could be resolved more effectively and the number of judicial appeals reduced. In addition, the objection procedure would serve to ensure that cases that do come before the courts are more clearly defined and better presented. This was supposed to reduce the length of judicial procedures significantly. 2.2 Pros and cons of external advisory committees in objection procedures The administrative authority is free to decide whether or not to appoint an external committee to hear objections. The literature mentions a number of advantages of appointing an external committee. 6 In the first place, an external committee acts as a fresh pair of eyes. If the aim of the objection procedure is to be able to correct errors as simply as possible, this can best be achieved if the reassessment is carried out by an external, independent body bringing a new perspective to the situation. A second advantage is that an external committee is preferable from the point of view of procedural justice. 7 An external committee is independent and has no axe to grind, and, because an advisory committee is itself also deemed to be an administrative authority, 8 its members must perform their duties impartially, as required by Article 2:4 GALA. It may be supposed that the person or persons lodging an objection and any other interested parties will be more willing to accept the decision on the objection if it is based on the advice of an external committee than if it was handled entirely by the administrative authority itself. A third advantage can be described as the mediator function of an advisory committee. In accordance with the intention of the GALA objection procedure, the advisory committee must seek to find a solution for the dispute. Finally, it has been noted as an advantage that an external committee brings expertise into the organisation. This is particularly relevant where the administrative authority is only a relatively small entity, such as a committee in one of the smaller municipalities. 5 PG Awb I, p. 279; available at: < 6 See footnote 4. 7 See in general on procedural justice: N. Luhmann, Legitimation durch Verfahren (6 th ed.), Suhrkamp, Frankfurt am Main, 2001 (1969); John Rawls, A Theory of Justice, Harvard University Press, Cambridge Massachusetts, Administrative Jurisdiction Division of the Council of State 19 March 2003, AB 2003/301 with note by Peters. 181

6 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts Obviously, there are also disadvantages to appointing an external advisory committee. Objections take longer to deal with, are more expensive and, as will be explained below, the committee may not carry out a full review. Generally, external members of an advisory committee take on the job in addition to other work and so are not available on a full-time basis. This means that the organisation cannot dispose of their time freely, and this may result in longer objection procedures. Another possible disadvantage is the cost. Members of an external advisory committee generally receive a fee for preparing and attending meetings and drafting recommendations. This inevitably leads to higher costs compared to procedures where there is no external advisory committee. Finally, the procedure involves a full review of the decision, which means an evaluation both of the lawfulness and the merits of the decision. Although an external advisory committee is also required to carry out a full review, such committees often fail to review the merits of a decision. 9 This is because committees of this kind often feel uncomfortable commenting on what they regard as the policy and/ or decision-making discretion of the administrative authority, and thus generally confine their recommendations to factors concerning the lawfulness of the decision. 2.3 Relationship between Advisory Committee and Responsible Authority After the hearing, the advisory committee reports to the administrative authority. It advises the authority how to deal with the objection and makes a proposal for the decision to be made on the objection. Under Article 7:13.6 GALA, the recommendation must be given in writing and include a record of the hearing. The administrative authority must consider the review on the basis of the committee s recommendation. As an advisory committee is deemed to be an adviser for the purposes of the GALA, the administrative authority must satisfy itself that the advisory committee prepared its recommendation with due care, both as regards the way it performed its duties and the content of the recommendation (Art. 3:9 GALA). The administrative authority must read the recommendation with a critical eye, as it retains primary responsibility for the decision on the objection. It must always form its own judgment on the objection and must decide what the right decision is in law. Only when the administrative authority has satisfied itself that the examination was carried out with due care and is not defective may it base its decision on the committee s recommendation. If the decision is based on the committee s report, interested parties must be informed of the recommendations (Art. 3:49 GALA). The committee s recommendations are not binding and the administrative authority is not required to adopt them. However, if an administrative authority 9 See on this concerning review at the municipal level: A. Schwarz, De adviescommissie in bezwaar: inrichting van de bezwaarprocedure bij gemeenten (PhD. Groningen), The Hague, 2010, p. 273 et seq. 182

7 Advisory Objection Procedures in the Netherlands chooses to involve an advisory committee in dealing with an objection, it cannot simply ignore the committee s recommendations. Under Art. 7:13.7 GALA, it is then obliged not only to state the reasons for its decision on the objection, but also for its departure from the recommendation, and it must enclose the recommendation with its decision. 3. The Advisory Committee on Competition Act Objections 3.1 General According to Art. 5 of the decree establishing the Advisory Committee on Competition Act Objections (AbM), 10 the Advisory Committee is responsible for advising the Netherlands Competition Authority on objections against sanctions (fines and orders subject to a financial penalty) the authority has imposed under Article 62(1) of the Netherlands Competition Act. Currently, the Committee consists of 15 members (lawyers and economists). Six of these have a primarily academic background, seven a judicial, and two are in public service. Its members are independent and have no ties with the Competition Authority. 11 All its members have special experience or expertise in the field of administrative law, European law (specifically competition law), and/or the economy. The Committee is responsible for hearing interested parties under Art. 7:2 GALA, and this means both the companies concerned and the Competition Authority. Generally, objections are heard by a subcommittee of three or five members. The members involved in handling a case decide the Committee s recommendation by majority vote. If there is an even number of members involved in a case, the subcommittee s chair has a casting vote in the event of a tie. Like other external committees, the Advisory Committee on Competition Act Objections reports to the administrative authority (in this case the Competition Authority) in writing. Here too, the Competition Authority is not bound by the Committee s recommendations and it will be shown below that the Competition Authority relatively often departs from the Committee s recommendations. As explained above, this means that it must give reasons not only for its decision but also for its departure from the Committee s recommendations, and must enclose the report with its decision. 3.2 Relationship to Direct Appeals Act As noted above, the bill currently before Parliament aims to abolish the objection procedure in relation to sanctions imposed by the new Netherlands Consumer 10 Besluit tot instelling Adviescommissie bezwaarschriften Mededingingswet, Stcrt. (Government Gazette) 1998, nr. 146, p Under Art. 6 of the decree, they must ensure they do not deal with any case they have in any way been involved in. This obligation also follows from Art. 2:4 GALA. Members of the Committee regularly declare themselves unavailable on this ground when the cases are being allocated. 183

8 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts Authority. It is, however, important to add that it is already possible under current legislation to bypass the objection procedure. Under the Wet rechtstreeks beroep (Direct Appeals Act), which entered into force on 1 September 2004, Art. 7:1a was inserted in the GALA, by which a person lodging an objection may, in derogation from Art. 7:1, request the administrative authority to consent to direct appeal to the administrative courts. Under the third paragraph of Art 7:1a, the administrative authority may consent to the request if the case lends itself to such a procedure, but must refuse the request if another objection has been lodged against the decision which does not contain a similar request (second paragraph). It is Competition Authority policy to consent to such requests as a rule. At the time the provision entered into force, the Advisory Committee on Competition Act Objections believed no doubt encouraged by the many lawyers at hearings moaning about the pointlessness of the whole objection procedure that this would result in a substantial reduction in the number of objections. Nothing could have been further from the truth. From the evaluation of the Direct Appeals Act, it emerged more generally that only sporadic use was made of the possibility of bypassing the objection procedure. 12 This reticence was due not to ignorance, but was often a deliberate choice. Attorneys regarded skipping the objection procedure as a missed opportunity. From the evaluation of the Act, it also emerged that where an independent committee advised during the objection procedure, the procedure was more likely to be regarded as a success. We would add that the Competition Authority regularly departs from the recommendations of the Advisory Committee, particularly where the Committee recommends declaring an objection well founded in whole or in part. 13 Our hypothesis is that the parties believe they have more chance of a successful appeal to the administrative courts if they have the backing of an expert report from the Advisory Committee. From this perspective, the objection procedure affords an additional opportunity for objectors to be proved right, albeit only in a favorable report from the Advisory Committee. The worst that can happen is that the Committee will recommend declaring the objection unfounded. In other words, given that reformatio in peius is not allowed, objectors stand only to gain from the objection procedure. Add to this the fact that objections and appeals have suspensory effect on a decision imposing a sanction (Art. 63 Competition Act) and it is clear why the objection procedure is so popular in relation to Competition Authority decisions and why so little use is made of the possibility of appealing directly to the administrative courts, avoiding the objection procedure. 12 B.M.J. van der Meulen, M.E.G. Litjens & A.A. Freriks, Prorogatie in de Awb, Invoeringsevaluatie rechtstreeks beroep, WODC, The Hague, See below. 184

9 Advisory Objection Procedures in the Netherlands 3.3 The Advisory Committee as a Zero Tier Administrative Court If we look at the practice of the Advisory Committee, there are several points worth mentioning. These are above all based on the experience of the first author as a long-standing member of the Committee. The first is that the Advisory Committee objection procedure is very similar to a first instance appeal before the administrative courts. Its approach is what could be termed semi judicial. After the written objection and the grounds upon which it is based have been received, an instruction note is written, generally by the secretary, for the subcommittee charged with the hearing. An instruction note basically sets out the points that need to be decided and generally takes the form of a draft recommendation. It is, of course, intended only for internal use within the Advisory Committee. Before the hearing is held, the Competition Authority responds within the 10 days referred to in Art. 7:4.1 GALA by sending the parties and the Advisory Committee a written explanatory note. The explanatory note generally addresses the grounds put forward for the objection and is often the central document in the discussion at the hearing. The hearing itself is also similar to a hearing before an administrative court: the objector explains his case, the authority responds, the Committee questions the parties, and the objector may be given the opportunity to reply. This format is reinforced by the fact that the individual in the proceedings is almost always a professional organisation represented by highly qualified lawyers and other legal professionals. The Competition Authority is generally represented by at least a lawyer from its legal department, sometimes supplemented by economic expertise from within the organisation. In other words, the debate at the hearing is a professional one between subject material experts. It will be clear from the above that, as a rule, the objection procedure is supposed to facilitate a full ex nunc review of the original decision. However, in proceedings before the Advisory Committee there is no question of a full review in the sense originally intended by the legislature. In the first place, this has to do with the type of decisions that are subject to the advisory opinion of the Committee. Generally only two questions are in fact relevant: can the authority prove the facts alleged, and do they constitute an infringement of the provisions of the Competition Act? The Committee is, as it were, virtually compelled to carry out an ex tunc review. Moreover, given the size of the dossiers, a full integral review of the complex of facts is not really possible. The Committee does not feel it has to repeat the examination of the facts all over again and generally confines itself to deciding whether the authority has proved the facts alleged to the Committee s satisfaction and, bearing in mind the authority s duty of care and/or to give reasons for its decisions, if the Committee is not convinced it will recommend reviewing the case further in this respect. Though Art. 9 of the decree establishing the Advisory Committee does give it the power to hear witnesses and experts even where Art. 7:8 GALA does not apply (i.e. other than at the request of interested parties), this power has never been used as far as we are aware. The main reason for this, in our view, is that an independent investigation of the facts by the Advisory Committee would result in too big a delay in decision-making. Moreover, it is felt that correctly establishing 185

10 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts the facts is above all a matter for the administration. Nor do the purely policy aspects of decisions imposing sanctions really qualify for full review by the Advisory Committee. Though the statutory power to make decisions imposing fines is a discretionary power, 14 this discretion is significantly hedged in by policy rules (e.g. guidelines for fines, leniency reductions etc.) which the Competition Authority is obliged to apply under Art. 4:84 GALA except in special circumstances. Once it has been established that the guidelines for fines are generally adequate for determining the size of the fine, the Advisory Committee is no longer in a position to question the appropriateness of the policy rules in any specific case. Its recommendations are therefore confined, as a rule, to whether or not the administrative authority has applied the guidelines correctly and whether or not there is, in the particular case and having regard for the proportionality principle, a special circumstance which would justify a departure from the policy rules. Essentially, in our opinion, this differs little from way the first-instance administrative courts operate. In short: the objection procedure before the Advisory Committee is very similar to the procedure before a first-instance administrative court, both in terms of procedure and of what is reviewed. 4. The Reasons Given in the Bill for Abolishing the Objection Procedure in Relation to ACM Decisions Imposing Fines Against the background of the above, more general comments, we shall now discuss the reasons given in the bill for abolishing the objection procedure in relation to ACM decisions imposing fines. 15 The most important reason given is that the benefits of the objection procedure in general do not apply to objections to ACM decisions imposing fines. Apparently, decisions of the ACM imposing sanctions are of such a specific and special type that the usual benefits of an objection procedure do not apply. The proposal also notes that abolishing the objection procedure is expected to have a positive effect on the time taken to process cases, so that the ACM will be able to keep within the reasonable time required by Article 6 of the European Convention on Human Rights in more cases. The explanatory memorandum notes that both parties and non-parties benefit from obtaining the earliest possible clarity and legal certainty concerning the interpretation of a rule by the administrative courts. Finally, the explanatory memorandum mentions as an important advantage that scrapping the objection procedure will lead to a reduction in costs both for trade and industry and for the ACM itself. Let us consider these arguments more closely. 14 See Articles 56 et seq. Competition Act. 15 Explanatory memorandum, point at pp

11 Advisory Objection Procedures in the Netherlands 4.1 Objection Procedure Does not Operate as Sieve in Relation to ACM Decisions One of the most important advantages of the objection procedure is said to be the way it may act as a sieve, offering a way of resolving disputes without the intervention of an administrative court. However, according to the explanatory memorandum, it emerges from figures from the Competition Authority, the Telecommunications Authority and the Consumer Authority for the period 1 July 2009 to 1 July 2011 that this effect is relatively small for decisions imposing fines: 71% of infringers who lodge an objection against a Competition Authority decision end up making an appeal, for the Telecommunications Authority the figure is 91%, and for the Consumer Authority 67%. In our view, this shows that the objection procedure does in fact work for ACM decisions, but to a lesser extent than by comparison with decisions in other areas. 16 A possible explanation, at least as regards Competition Act related decisions, may be that the Competition Authority relatively often departs from the Advisory Committee s recommendations. This point will be discussed in more detail below. Also worth noting is that the effect is even less notable in relation to decisions of the Telecommunications Authority. One possible explanation could be that the Telecommunications Authority does not work with an external advisory committee at all, whereas both the other authorities do. If this hypothesis is correct, it is quite possible that appeals to the courts against decisions of the competition and consumer authorities imposing fines could rise by approximately 20% when the bypass procedure is abolished. In other words, even though the effect is relatively small, it does exist and particularly where use is made of an external advisory committee. The supposedly special nature of decisions imposing sanctions in competition cases is also demonstrated by the way the Competition Authority treats recommendations of the Advisory Committee. A recommendation is, after all, exactly that: a recommendation, and can thus be departed from. From research currently being carried out at Groningen University into municipal objection procedures, it emerges that municipal authorities depart from advisory committees recommendations in fewer than 2% of cases. 17 From an analysis of 34 normal Competition Authority cases in the period 1999 to 2009, 18 it emerged that the authority departed, to a greater or lesser extent, from the recommendation of the Advisory Committee in 50% of the cases. In only nine of the 17 cases in which the Authority followed the recommendation did it to do this without any reservation at all. In the other eight cases, it gave different and/or additional reasons for its decision 16 An effect (also referred to as a filter effect) of more than 90% is certainly no exception. See particularly K.H. Sanders, De heroverweging getoetst. Een onderzoek naar de functies van bezwaarschriftprocedures (PhD Groningen), Kluwer, Deventer, 1998; J.G. van Erp & C.M. Klein Haarhuis, De filterwerking van buitengerechtelijke procedures. Een verkennend onderzoek (WODC Cahiers ), The Hague, Further information on this study can be obtained from Ms. Rink herself at: e.m.rink@rug.nl. 18 The list was made available to us by the Competition Authority. These were all the normal cases that were handled in that period. Cases involving a sanction imposed via the accelerated procedure (the construction industry fraud) were kept out of the study. 187

12 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts on the objection. Notably, it followed the recommendation in all cases where the Advisory Committee advised declaring the objection unfounded. In other words: the Competition Authority only departed from the recommendation when the Advisory Committee advised that all or part of the objection should be declared well founded. These data provide sufficient basis, in our view, for the hypothesis that the relatively limited effect of the objection procedure as a sieve in relation to decisions imposing sanctions under the Competition Act can to some extent be explained by the fact that the Competition Authority departs from its Advisory Committee s recommendations relatively frequently. We have, incidentally, also taken a look, albeit a cursory look, at how the administrative courts both at first instance (Rotterdam district court) and on appeal (Trade and Industry Appeals Tribunal, CBb) view the differences in opinion between the Advisory Committee and the Competition Authority. From our very provisional analysis, it emerges that the district court took the side of the Competition Authority in approximately 60% of cases, while sharing the view of the Advisory Committee in 35%, whereas on appeal the tribunal took the side of the Advisory Committee in 60% of cases and that of the Competition Authority in 20%. These figures afford some basis for the hypothesis that the Competition Authority may well adopt too rigid a position during objection procedures. Further research is, however, necessary on this point. From our analysis, it also emerges that in 50% of cases the differences of opinion between the Competition Authority and the Advisory Committee concerned factual and evidentiary issues, and the classification of facts in the light of statutory concepts (was X present at meeting Y?; what is the relevant market?; does action X constitute a noticeable restriction of competition? etc.). In 25% of cases the difference of opinion concerned the proportionality of the fines imposed: have the guidelines been correctly applied (was the infringement minor or serious?; has the appropriate multiplication factor been applied?); is the case a special case within the meaning of Art. 4:84 GALA? In only 10% of cases was the difference purely on a matter of law (what is the correct interpretation of Art. 34 Competition Act?). During the passage of the Direct Appeals Act through Parliament it was noted that direct appeal to the administrative courts is particularly valuable in cases where the dispute is in any case no longer capable of resolution during the objection phase, 19 for example in cases where there is a fundamental difference of opinion on a question of law, in which it is clear from the start that the parties want the opinion of a court. 20 In our study, as will be clear from the above, we did not come across many cases of the type: fundamental differences of opinion on points of law. Most objections could be summarized as: I did not do it; if I did, it was not wrong; and if it was, the fine is too high. 19 Memorandum further to the report, Parliamentary Papers II, , p Memorandum further to the report, Parliamentary Papers II, , p

13 Advisory Objection Procedures in the Netherlands 4.2 No Dossier Building in ACM Cases? Another benefit of the objection procedure generally also proves less prominent in relation to decisions of the Competition Authority, the Telecommunications Authority and the Consumer Authority, again according to the explanatory memorandum. In general, objection procedures ensure that, where a dispute is nevertheless brought before the administrative courts, the court receives a more clearly defined and better presented case (dossier building). According to the explanatory memorandum this is less the case in relation to fines imposed by the three authorities referred to above. To quote: The practice at the Competition Authority, the Telecommunications Authority and the Consumer Authority shows, however, that, as a rule, infringers do not present new grounds in the objection procedure compared to the views expressed under Art. 5:50 in conjunction with Art. 5:53 GALA. Infringers have had more than sufficient opportunity to present their views in the pre objection procedure. Moreover, after the parties have been offered the opportunity to present their views in writing, it is customary for the three authorities to organise a hearing at which the parties have the opportunity to explain their views orally. All the arguments of infringers are thus generally already known before the objection procedure. Although some degree of repetition cannot be denied, it must be said that the objection procedure is in fact the first opportunity for parties to present their objections to the size of the fine imposed. The views expressed concern the inspector s report (Art. 59 Competition Act in conjunction with Art. 5:48.1 GALA). Such reports generally contain information about the procedure and the nature of the evidence, an extensive review of the facts and circumstances of the case (organisation, anticompetitive behaviour, agreements, market sharing etc.), a legal determination of these facts (decision, concerted practice, abuse etc.) and an assessment in the light of the relevant statutory provisions (Art. 6 Competition Act, Art. 101 TFEU, etc.), and the allocation of blame among the parties. The report does not contain a draft decision or other information about the fine to be imposed. Indeed, the administrative authority is not obliged to give this information except where specific statutory requirements apply. Questions of law will therefore land fairly and squarely on the plate of the first instance courts, unless there is some form of compensation in the sense of adjusting the primary decision-making phase. The Dutch competition law association (Vereniging voor Mededingingsrecht) has observed: that the ACM will design the procedure following the report phase in such a way that the parties concerned will be able to express their views on all formal and substantive matters in the decision to be taken. For this, the decision will have to be fully open to inspection. The parties concerned should, for example, be able to comment on the fine and its basis; it should also be possible to hear witnesses at Competition Authority hearings. In our view, the explanatory memorandum does not give a wholly accurate description of the function of dossier building. It is indeed, particularly as regards 189

14 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts decisions of the Competition Authority and the Telecommunications Authority where parties are generally represented by highly qualified legal practitioners, not surprising that the grounds for appeal submitted to the courts do not differ greatly from the views expressed and the grounds for objection. It is also true that there is a danger of repetition in the three phases of an administrative appeal (expression of views, grounds for objection and grounds for appeal). Nevertheless, as far as dossier building is concerned, it is also important that the often numerous grounds for objection are reduced to a few crucial ones (objections of 100 plus pages, with a recent high of 460 pages are no exception at the Competition Authority). It would be better to describe this as the reduction function of the objection procedure. In other words, a large dossier (in exceptional cases 1 m 3 of paper) is regularly reduced to several manageable points of dispute in the objection phase. If this phase goes, then so does this simplification and the first instance courts will be faced with the full burgeoning dossier. 4.3 Length of Objection Procedure Under Art. 7:10.1 GALA, the administrative authority must give its decision within six weeks from the day after the day on which the time limit for filing an objection has expired, or within 12 weeks if a committee has been established as referred to in Art. 7:13. Art. 7:10.3 provides that the administrative authority may postpone the decision for not more than six weeks. These time limits are almost never met in objections against Competition Authority decisions imposing a sanction. From data made available to us by the Competition Authority, it emerges that the average period from the time the objection is received until the recommendation is given is 8.9 months. This picture is to some extent distorted by the fact that in most cases a pro forma objection is lodged first, and the grounds for objection are then filled in after a time limit set by the authority, sometimes much later. The time the Competition Authority then needs to take a decision on the objection varies from case to case, most cases being concluded within five months of receipt of the recommendation, but more than 12 months (with a high of more than two years) 21 is no exception. It is clear from the decisions of the trade and industry appeals tribunal that it is impossible to determine in the abstract what a reasonable time is for procedures under Art. 6 of the Competition Act (and the same applies to Art. 101 TFEU), but that this must in each case be assessed in the light of the circumstances of the specific case. Account must be taken of the complexity both in fact and in law of the case and the conduct of both the company concerned and the administrative authority, and it is also relevant what is at stake for the company concerned. 22 The 21 See, for example, District Court Rotterdam 4 March 2008, LJN: BC8958: objection lodged on 14 January 2004, AbM report of 29 September 2004, followed by the decision on the objection, dated 9 November See e.g. Trade and Industry Appeals Tribunal 3 July 2008, AB 2009/305 with note by I. Sewandono, LJN: BD6629; Trade and Industry Appeals Tribunal 7 July 2010, AB 2010/235 with note by 190

15 Advisory Objection Procedures in the Netherlands diversity and the fact that these proceedings are not very repetitive mean that it cannot be assumed as a general rule that a reasonable time has been exceeded if the court has not given its decision within two years after the start of the time limit. In two recent decisions dating from August 2012 relating to fines in connection with fraud in the construction industry the tribunal arrived at the conclusion that the reasonable time should be set at three and a half years, of which two years could be attributed to administrative decision-making and review in respect of an objection and eighteen months to the first instance judicial proceedings. 23 Although it cannot be denied that the length of the review in objection proceedings is much greater than the standard period allowed by the GALA, it cannot be said, based on the information made available to us and the published case law, that the duration of the objection procedure has caused great difficulties in relation to Art. 6 ECHR. 4.4 Lower Cost: No Demand for Low Threshold Procedure According to the explanatory memorandum, creation of a low threshold procedure is also less important in relation to ACM decisions imposing fines. To be sure, an objection procedure is cheaper and thus more accessible than an appeal to an administrative court. Clearly, abolishing the objection procedure would result in doing away with the direct costs accompanying the procedure, namely: Costs of the advisory committee (fee and secretariat); 24 Organization of hearing (report, logistics costs, possible translation fees); Competition Authority costs (preparation, hearing, assessment of recommendation, drafting decision on the objection); Cost of legal practitioners of objectors and possible other interested parties. It must, of course, first be noted that the initial costs concerning the preparation of the case, which are currently incurred during the objection procedure, both by the Competition Authority and interested parties, will shift to the judicial procedure. Interested parties costs for drafting an objection will now be made when the appeal is made to the court. Nor will this be very different for the administrative authority. Little is thus to be expected in the way of benefit or cost saving. Above, we have argued that if the objection procedure were abolished, this should be coupled with compensation in the primary decision-making phase. Obviously this R. Stijnen, LJN: BN0540. Recently confirmed in Trade and Industry Appeals Tribunal 28 August 2012, case numbers AWB 09/982 and AWB 09/ Trade and Industry Appeals Tribunal 28 August 2012, case numbers AWB 09/982 and AWB 09/983. In the earlier decision of 3 July 2008 (see previous footnote), a period of 2 years and 6 months was regarded as reasonable for the administrative phase, given the complex nature of the case. 24 When asked, the Competition Authority informed us that there were no public data which would make it possible to work out the cost of the objection phase, for example the total cost of the Advisory Committee. 191

16 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts would entail new costs, both for the administrative authority and for interested parties. The cost saving anticipated by the government does not therefore appear to be very substantial and will have to be set off against expected higher judicial costs. We have argued above that more appeals will be made to the courts, particularly where competition and consumer authority decisions imposing fines are concerned, and we also expect, certainly in relation to competition decisions, that the work will become more complex for first instance administrative courts, because the reduction function of the objection procedure will have disappeared. In other words, abolishing the objection procedure will mean a shift in costs from the administrative authorities to the courts. 5. Conclusion It is not our intention in this article to express a preference about the proposed abolition of the objection procedure in relation to ACM decisions imposing sanctions as entertained in the bill to streamline the procedures and enforcement instruments available to the ACM. Our aim is to give a more complete and accurate picture of the pros and cons than the bill does. The arguments for abolishing the objection procedure can be summarised as follows: it is true that some of the general aims of the legislature in creating a mandatory objection procedure in the GALA feature less prominently in relation to ACM decisions imposing sanctions. Access to an informal, low threshold, cheap review procedure to repair manifest errors of the administration is simply less important in relation to these decisions. If we confine ourselves to competition decisions: the decisions are made by a professional, competent organisation and address professional market parties which call in the assistance of qualified legal professionals, generally also during the preparation of the primary decision; the decisions are made after a thorough preprocedure, including a hearing at which interested parties can express their views on the report on which the decision-making is based. To a certain extent the exchange of arguments in the objection procedure can be regarded as repetitious. However, if the objection procedure is abolished in relation to these decisions, it will in our view be necessary to reinforce the primary decision-making phase and give interested parties the opportunity to present their views further to a draft decision which includes the size of the proposed fine. If no such changes are made in compensation, abolition of the objection procedure will imply a loss of legal protection for companies that are fined; the objection procedure in competition cases is highly formalised and judicialised. There is hardly any question of an informal exchange of opinion between the individual and the administration (mediator function); 192

17 Advisory Objection Procedures in the Netherlands the review of competition decisions during the objection procedure leaves little room for a genuine, integral review and is essentially no more than a lawfulness test. Another advantage of abolishing the objection procedure would on the face of it seem to be a significant time gain, even if the limits set by Art. 6 ECHR do not pose a real problem here. One of the advantages of appointing an external advisory committee that expertise is brought in that is lacking within the organisation is hardly relevant in relation to competition decision-making. However expert the members of the Advisory Committee may be, it cannot be said that they bring expertise into the decision-making process that is lacking at the Competition Authority. The disadvantages of abolishing the objection procedure can be summarized as follows. Though the objection procedure only operates as a sieve to a limited extent compared to decision-making at the local and regional levels, it cannot be denied that this effect does exist and particularly in relation to the Competition Authority and the Consumer Authority, organisations where the procedure is farmed out to external advisory committees. As regards the limited effect in relation to competition decisions imposing a sanction, this can to some extent be explained by the way the Competition Authority so conspicuously ignores the Advisory Committee s recommendations. We would expect that the effect would be greatly en hanced if the Competition Authority were to follow the recommendations more often. It seems as if the authority, once it has adopted a particular position, is reluctant to review a contested decision on substantive grounds. Abolishing the objection procedure, in particularly in relation to competition and consumer authority decisions where an external advisory committee is involved, must be expected to have a negative impact on the legitimacy of the decision-making process in the eyes of interested parties. It would be well to remember: that justice should not only be done, but should [ ] be seen to be done. 25 If the objection procedure is abolished, it is also to be expected that the first instance administrative courts will face a significantly increased caseload. Not only because the number of appeals against decisions imposing sanctions will increase, but also because the courts will more often be faced with dossiers that have not yet been reduced to the main points at issue. Certain grounds for appeal (for example concerning the size of the fine) are only independently reviewed for the first time by the first instance courts. In other words, the administrative courts will have to deal with more cases, and each case will take longer to deal with properly, which may in turn give rise to difficulties in relation to Art. 6 ECHR. It is indeed debatable whether abolishing the objection procedure will result in a substantial cost saving, or whether the costs will not simply be shifted from an administrative authority (ACM) to the judiciary. In our view, the cost benefit for 25 R v Sussex Justices, Ex parte McCarthy [1924] 1 KB 256,

18 IV Independence of Advisory and Complaint Committees and Final Dispute Resolution by Administrative Courts the parties concerned must also be examined more closely. If the costs of objecting were truly a factor of importance, it would have been reasonable to expect much more use to have been made of Art. 7:1a GALA (application to bypass objection procedure) in the past. Apparently, the companies concerned feel no great need to bypass the objection procedure. Finally, it is perhaps worth returning to the parliamentary handling of the Direct Appeals Act. After the Act had been debated in the Senate of the Dutch Parliament, the justice minister wanted to clarify one or two points and stressed that direct appeal had to remain the exception: 26 Only in very special cases, in which the objection procedure must be regarded as a needless delay in the resolution of the dispute, should it be possible to do without it. Two examples were mentioned in the Parliamentary discussion: cases (...) in which all concerned have already exchanged arguments during the preparation of the decision so exhaustively that it is already certain that an objection procedure will have no added value ; cases in which there is no difference of opinion whatever concerning the determination and interpretation of the factual constellation, but parties need a judicial decision on a point of law to end their dispute. How special are ACM decisions imposing sanctions in actual fact? And are they so special that departure from the general regime under the GALA is justified? We eagerly await the opinion of the legislature. 26 Parliamentary Papers I, , F. 194

19 Advisory Committees on Damage Compensation in Zoning and Infrastructural Planning: A Quest for Independence Dick Lubach* 1. Introduction This contribution concerns advisory committees on damage compensation in zoning and infrastructural planning. 1 Only recently have they been regulated in a formal act despite having existed in practice for over 20 years. Based on my experience with several damage compensation committees over the years I will make some observations within the framework of this conference. Although there are mainly two reasons for establishing such committees: independence and competence, I will focus on the first aspect. I will defend the position that, although neither the legislator nor the jurisprudence is convincingly clear in this respect, independence is needed and that in practise this independence is not always guaranteed and sometimes threatened. To develop a convincing argument for this position the reason for independence has to be discussed and the practice of these committees has to be evaluated. To be able to do this properly a short description of the development of the pertinent regulation in Dutch law is useful. 2. Development of Damage Compensation in Spatial Planning Law and the Position of Advisory Committees. Aside from some rare early examples, the theory and practise of compensation for damages caused by per se lawful decisions in the field of physical planning developed in the second half of the 20 th century. The predecessor to the current Spatial Planning Act is the Spatial Planning Act The latter contained, for the first time, a provision for damage compensation (planschade). However, there was no legal obligation based on the act to install an advisory committee in the decision-making process. * Prof. dr. D.A. Lubach is Professor of construction law at the University of Groningen, the Netherlands, and Of Counsel for Damsté Advocaten en Notarissen in Enschede. He is chairman of several municipal advisory committees on damage compensation. He is also member of the Decision-making committee (DMC) of the Schadeschap Schiphol. 1 Planschade- en nadeelcompensatiecommissies. 2 Wro: Wet ruimtelijke ordening, Stb. (Law Gazette) 2006, WRO: Wet op de Ruimtelijke Ordening, Stb. (Law Gazette) 1962,